UNCTAD pegs GDP growth forecast at 6.5% this year

United Nations: India’s economy is projected to grow by 6.5 per cent in 2024, according to a report by the UN, which noted that multinationals extending their manufacturing processes into the country to diversify their supply chains will have a positive impact on Indian exports.

UN Trade and Development (UNCTAD) in its report said that India grew by 6.7 per cent in 2023 and is expected to expand by 6.5 per cent in 2024, continuing to be the fastest-growing major economy in the world. “The expansion in 2023 was driven by strong public investment outlays as well as the vitality of the services sector which benefited from robust local demand for consumer services and firm external demand for the country’s business services exports,” the report said, adding that these factors are expected to continue to support growth in India in 2024.

The report also noted the increasing focus by multinationals on India as a manufacturing base as they diversify their supply chains, a reference to China.

“In the outlook, an increasing trend of multinationals extending their manufacturing processes into India to diversify their supply chains will also have a positive impact on Indian exports, while moderating commodity prices will be beneficial to the country’s import bill,” it said.

Last week, the flagship ‘2024 Financing for Sustainable Development Report: Financing for Development at a Crossroads’ launched at the world body said that investment in South Asia, particularly in India, remains strong. It added that India is benefiting from growing interest from multinationals, which see the country as an alternative manufacturing base in the context of developed economies’ supply chain diversification strategies, making an apparent reference to China.

The UNCTAD report said the Reserve Bank of India (RBI) is expected to keep interest rates constant in the near term, while restrained public consumption spending will be offset by strong public investment expenditures. In other Southern Asian countries, however, economic growth remains more subdued.